Toyota takes hit to profit on lower sales, yen

In this February 18, 2016 photo, a man arrives for an event at a Toyota Jamaica showroom in Kingston.

Toyota Motor Corp said on Monday that its profit fell 23 per cent in the October-December quarter from a year earlier as its sales fell and a stronger yen squeezed its overseas earnings.

The company, which recently relinquished the crown of world's biggest automaker to German rival Volkswagen, reported that its fiscal third quarter profit was •486.5 billion (US$4.3 billion), down from •627.9 billion in 2015.

A strong yen reduces the foreign-earned income of Japanese exporters when translated into yen. In its report for October-December, Toyota used an exchange rate of yen109 to the dollar, compared with a rate of yen121 a year earlier. During the quarter, the yen actually weakened against the dollar, which was trading at yen102 in early September but ended the year at about •117.

It raised its full-year profit forecast through March 2017 to •1.7 trillion (US$15 billion), noting that it expects more favourable exchange rates.

The forecast is better than its earlier projection of •1.6 trillion (US$14 billion) profit, but below the •2.3 trillion earned in the previous fiscal year.

Earlier in the day, Toyota said that it would work with Suzuki Motor Corp, which specialises in tiny cars, on ecological, safety, and information technology - fast-growing areas in the industry. The Japanese automakers announced in October that they would study a partnership.

Volkswagen is likely to claim the title of world's biggest automaker for the first time as General Motors Company is not expected to beat Volkswagen's worldwide sales of 10.31 million vehicles in 2016. Toyota sold 10.175 million vehicles.

Detroit-based General Motors reports its sales later this week. Jim Cain, spokesman for the US automaker, has said that he doesn't think GM will hit 10.3 million.